Nissan slashes full-year forecast as first-half profit falls

Nissan blamed the poor outlook on weak first-half earnings, a strong yen, an uncertain global outlook and the stagnation of the car industry in general. (AP)
Updated 12 November 2019

Nissan slashes full-year forecast as first-half profit falls

  • Full-year sales are now estimated at ¥10.6 trillion, down from a previous forecast of ¥11.3 trillion
  • Nissan blamed the poor outlook on weak first-half earnings, a strong yen, an uncertain global outlook and the stagnation of the car industry in general

YOKOHAMA, Japan: Crisis-hit Japanese automaker Nissan Tuesday slashed its full-year forecast for both sales and profit as it struggles with weak demand in Japan, the US and Europe, as well as fallout from the arrest of former boss Carlos Ghosn.
Nissan downgraded its net profit forecast to ¥110 billion ($1 billion) for the fiscal year to March 2020, compared with an earlier estimate of ¥170 billion.
Full-year sales are now estimated at ¥10.6 trillion, down from a previous forecast of ¥11.3 trillion.
Nissan blamed the poor outlook on weak first-half earnings, a strong yen, an uncertain global outlook and the stagnation of the car industry in general.
Incoming chief financial officer Stephen Ma said: “Sales in China outpaced the market but sales in other key regions including the US, Europe and Japan underperformed in those markets. This resulted in the overall decrease of our market share.”
Net profit for the six months to September plunged 73.5 percent to ¥65.4 billion on sales down 9.6 percent at ¥5.0 trillion.
It was its first earnings announcement since Nissan named Makoto Uchida as new chief executive last month, elevating the insider heading the firm’s China unit as it overhauls its leadership after the Ghosn scandal.
The appointment, to take effect on December 1, came after months of turmoil for the automaker in the wake of the arrest of former chief Ghosn on allegations of financial misconduct.
Former CEO Hiroto Saikawa resigned in September after an investigation prompted by the Ghosn scandal revealed he was among Nissan executives who received excess pay by altering the terms of a share price bonus.
“Nissan’s new management is setting sail in a storm,” said Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm.
“Uchida is expected to show new strategies for Nissan’s survival,” Takada said.
The automaker has cited a global slowdown in the auto sector, but it is also suffering from a lack of innovation on its production line and reputational damage from the Ghosn scandal.
Uchida inherits the harsh cost-cutting measures Saikawa proposed as a way out of the crisis — including reducing dealer incentives and promotions but also cutting global production by 10 percent to 2023 — a measure that means the loss of 12,500 jobs.
“Additional restructuring is possible in the wake of the layoff plan,” Takada said.
Asked about possible fresh job losses, Nissan official Ma said no new announcement would be made until the full new management team is in place on December 1.
Adding to Nissan’s woes is continued tension within the three-way alliance with Mitsubishi Motors and Renault.
Ghosn, who created the alliance, wanted greater integration with France’s Renault, and says his push for that prompted angry Nissan executives to plot against him.
The two firms have made a show of holding the marriage together in the wake of Ghosn’s arrest, but tensions have bubbled to the surface.
Renault holds a 43-percent stake in the Japanese automaker, which in turn controls 15 percent of the French firm but has no voting rights.
“The negative impact of the furor around Ghosn is gradually becoming visible,” Takada said. “The alliance is facing a crucial stage,” he added.
Ghosn is out on bail in Tokyo, awaiting a trial that reports have suggested could start in April on charges of under-reporting millions of dollars in salary and using company funds for personal expenses.
He denies any wrongdoing.


France ready to take Trump’s tariff threat to WTO

Updated 08 December 2019

France ready to take Trump’s tariff threat to WTO

  • Macron government will discuss a global digital tax with Washington at the OECD, says finance minister

PARIS: France is ready to go to the World Trade Organization to challenge US President Donald Trump’s threat to put tariffs on French goods in a row over a French tax on internet companies, its finance minister said on Sunday.

“We are ready to take this to an international court, notably the WTO, because the national tax on digital companies touches US companies in the same way as EU or French companies or Chinese. It is not discriminatory,” Finance Minister Bruno Le Maire told France 3 television. Paris has long complained about US digital companies not paying enough tax on revenues earned in France.

In July, the French government decided to apply a 3 percent levy on revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million ($845 million) worldwide. It is due to kick in retroactively from the start of 2019.

Washington is threatening to retaliate with heavy duties on imports of French cheeses and luxury handbags, but France and the EU say they are ready to retaliate in turn if Trump carries out the threat. Le Maire said France was willing to discuss a global digital tax with the US at the Organization for Economic Cooperation and Development (OECD), but that such a tax could not be optional for internet companies.

“If there is agreement at the OECD, all the better, then we will finally have a global digital tax. If there is no agreement at OECD level, we will restart talks at EU level,” Le Maire said.

He added that new EU Commissioner for Economy Paolo Gentiloni had already proposed to restart such talks.

France pushed ahead with its digital tax after EU member states, under the previous executive European Commission, failed to agree on a levy valid across the bloc after opposition from Ireland, Denmark, Sweden and Finland.

The new European Commission assumed office on Dec. 1.